As a business owner, managing cash flow is essential for the success and survival of your company. However, in times of economic uncertainty, it can be even more challenging to keep your cash flow in order. With the COVID-19 pandemic, the ever-increasing energy costs and the general economic uncertainty, many UK businesses have been hit hard and are struggling to stay afloat.
One of the biggest challenges businesses are facing is a decrease in revenue. This can make it difficult to pay bills, make payroll, and invest in growth. There are several strategies you can implement to manage your cash flow during these difficult times.
- Revisit your budget/forecasts: Take a close look at your budget and identify areas where you can cut costs. Consider reducing or totally eliminating non-essential expenses and focus on the most important aspects of your business.
- Prioritise your expenses: Focus on paying the bills that are most critical to the survival of your business. This might include rent, payroll, and utilities. You can then work on paying other creditors as cash flow allows.
- Communicate with your creditors: If you’re struggling to make payments, don’t be afraid to proactively reach out to your creditors. Many businesses are facing similar challenges and may be willing to work with you on a payment plan.
- Utilise government assistance: The UK government has implemented several measures to help businesses since the pandemic. These include grants, supported loans, and tax reliefs. Make sure you are aware of the different options available to you and take advantage of them if they can help ease your cash flow concerns.
- Keep a close eye on your cash flow: Regularly monitoring your cash flow is essential. Keep track of your income and expenses, and make sure you have a good understanding of when bills are due and when you can expect to receive payments. This will help you anticipate any potential cash flow issues and take action before they become a problem.
- Cash flow financing. There are a multitude of different products available that can assist in managing the working capital cycle of your business. Independant business finance specialists will take time to understand your business and help to source products that will best support the trading now and in the future.
Managing cash flow is always important, but it becomes even more crucial during times of economic uncertainty. By implementing these strategies and keeping a close eye on your cash flow, you can help ensure the survival and long-term success of your business.
Matt Hawcroft, Commercial Finance Partnership, 16th January 2023